Cash still king in Latin America

01 NOV 2017

LIVE FROM GSMA MOBILE 360 LATIN AMERICA, BOGOTA: Millicom’s head of mobile financial services said cash still reigns supreme, despite his company’s Tigo Money product signing up 4 million users in the region.

Ronald Alvarenga said people like the feel of cash in their hands and the way around this is to educate them about the benefits of mobile money services, including the simplicity of the services. He also talked up the importance of working with the traditional banking sector to be “part of the existing ecosystem and existing money flows”.

Still, the company expects to process $2.7 billion and 133 million transactions via its mobile money service this year, which indicates the size of the opportunity in the region.

Alix Murphy, director of mobile partnerships at World Remit, was asked to rank the state of mobile money in LatAm on a scale of one to ten. Murphy said she would be diplomatic and say five because, although there is a strong take up of these services, it is not on par with regions including Asia and Africa, where governments have made mobile money a key pillar of financial inclusion.

Talking on Alvarenga’s point of educating people, she said consumers will soon realise it means they can save time and money rather than traveling to far away locations to visit agents.

A fairer societyHernando Rubio, CEO of CeluPlata, said mobile money services can mean a fairer society if used to find solutions to pain points specific to the region. One example is giving people loans to pay their utility bills at competitive rates, so they don’t have to resort to loan sharks who can charge between 500 per cent and 600 per cent interest rates.

Another example was giving consumers the option to prepay for access to online services normally requiring credit or debit cards, which many of them do not have. For instance, his company offered prepaid access to Netflix, which became the source of 70 per cent of its sales.

Rubio pointed out emerging countries are still working with cash while developed markets have moved from plastic to mobile. Latin America now has the chance to jump to the level of developed countries as they can “meet in a world of digital payments”.